RTTNews - Stocks finished notably lower on Friday, although a late session rally helped to mitigate the pullback prompted by the day's disappointing economic data. The major averages all closed lower by hefty margins, with the day's retreat leading to a lower overall finish for the week.

The decline in equities came following the release of Reuters and the University of Michigan's preliminary report on consumer sentiment for the month of August, which showed that the consumer sentiment index unexpectedly decreased compared to the previous month.

The report showed that the consumer sentiment index fell to a reading of 63.2 in August from a reading of 66.0 in July. The decrease surprised economists, who had been expecting the index to increase to 69.0.

Coupled with disappointing retail sales figures released earlier this week, the data indicated that the American consumer is still struggling, prompting the pullback by stocks.

Also on the economic front, the Federal Reserve revealed that industrial production in the month of July increased by more than economists had been anticipating, boosted by a jump in auto production.

The data showed that industrial production increased by 0.5 percent in July after falling by 0.4 percent in June. With the increase, industrial production rose for the first time since December of 2007. Economists had been expecting a slightly more modest increase in industrial production of about 0.4 percent.

Earlier, traders looked to figures from the Labor Department showing that consumer prices were unchanged in the month of July, with decreases in food and energy prices offsetting higher prices for apparel and tobacco.

The Labor Department said its consumer price index was unchanged in July after increasing by an unrevised 0.7 percent in June. The lack of growth in consumer prices came in line with the expectations of economists.

Excluding the decreases in food and energy prices, the core consumer price index edged up 0.1 percent in July following a 0.2 percent increase in the previous month. Economists had expected the index to increase by 0.1 percent.

The major averages saw considerable upside heading into the close, offsetting some of their early losses. The Dow closed down by 76.79 points or 0.8 percent at 9,321.40, the Nasdaq fell by 23.83 points or 1.2 percent to 1985.52 and the S&P 500 slipped by 8.64 points or 0.9 percent to 1004.09.

With the losses, the major averages all closed modestly lower for the week following four consecutive weekly gains. While the Dow fell 0.5 percent for the week, the Nasdaq and the S&P 500 posted weekly loses of 0.7 percent and 0.6 percent, respectively.

Sector News

Electronic storage, and housing turned in some of the day's worst performances, with the NYSE Arca Disk Drive Index and the Philadelphia Housing Sector Index falling by 3 percent and 2.9 percent, respectively. While the housing index remained in a trading range, the disk drive index pulled back off of a ten-month closing high set on Thursday.

Further, oil service stocks also retreated by a notable margin, with the Philadelphia Oil Service Sector Index posting a loss of 2.9 percent on the day. The weakness in the oil service sector came as the price of crude oil is fell by $3 a barrel.

The index was hurt by a pullback in shares of Global Industries (GLBL), which slipped by 4 percent on the session. The decline pulled the stock off of its best closing level in nearly eleven months.

Semiconductor, chemical, steel, and gold stocks also saw considerable weakness among others, while some banking, utility and defense stocks were able to climb into positive territory late in the session.

Dow Components

Shares of Boeing (BA) led the retreat in the Dow after it was revealed that the company ordered an Italian supplier to stop making the fuselage sections of its 787 Dreamliner aircraft after flaws in the fuselage's composite skin were discovered.

The news was just the latest setback for the Boeing much discussed airliner, which is already two years behind schedule. The stock closed down by 3.8 percent, falling to a one-week closing low after challenging a six-week high in the previous session.

Shares of chemical giant DuPont (DD) also fell, posting a loss of 2.6 percent on the day. The stock backed off of Thursday's ten-month closing high after seeing choppy movement over the course of the week.

Alcoa (AA) was also one of the Dow's worst performers, sliding by 3.2 percent. Shares of the aluminum producer pulled back well off the ten-month closing high set on Thursday.

Caterpillar (CAT), Home Depot (HD) and 3M (MMM) also moved sharply lower, while Bank of America (BAC) bucked the downtrend, rising by 2.3 percent. The stock saw a mid-afternoon rally that helped it to finish at a fresh eight-month closing high.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished mostly higher on Friday. Japan's benchmark Nikkei 225 Index rose by 0.8 percent, while Hong Kong's Hang Seng Index climbed 0.2 percent. Meanwhile, India's BSE 30 fell by 0.7 percent.

Meanwhile, the major European markets closed notably lower, with the French CAC 40 Index and the U.K.'s FTSE 100 Index falling by 0.8 percent and 0.9 percent, respectively, while the German DAX Index posted a loss of 1.7 percent.

In the bond markets, treasuries saw notable gains amid the pullback on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed at 3.558 percent, posting a loss of 3.2 basis points on the day.

Looking Ahead

Looking ahead to next week, traders will be looking to data on the health of the housing market, with figures on housing starts and existing home sales likely to dominate the headlines.

In addition, trading could be impacted by reports on producer prices and jobless claims as well as a speech from Federal Reserve Chairman Ben Bernanke to close out the week.

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